Hydrogen fuel-cell cars look to overtake electric autos

By Vanessa Ko, for CNN

Updated 9:58 PM ET, Sun November 25, 2012

Fuel-cell carsL powering ahead5 photos

Charging ahead with hydrogen – The Hyundai ix35 powered by a hydrogen fuel-cell is put through its paces at the Yeosu World Expo 2012 earlier this year. The company plans to make 1,000 fuel cell cars by 2015.

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Fuel-cell carsL powering ahead5 photos

Under the hood – The fuel-cell stack converts hydrogen into electricity to charge the battery, which in turn drives the motor.

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Fuel-cell carsL powering ahead5 photos

Fill 'er up – The high cost of creating a network of hydrogen refuelling stations is one problem facing the wider adoption of fuel-cell cars.

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Fuel-cell carsL powering ahead5 photos

Publically minded – Other applications of hydrogen fuel-cells include buses. Fuel-cells are seen as more efficient and effective for large vehicles than standard battery powered electric vehicles.

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Fuel-cell carsL powering ahead5 photos

Not just for four wheels – Other applications could include fuel-cell bicycles, seen here at an event in Japan in 2010, and even homes.

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Story highlights

Commercial hydrogen fuel-cell cars set to be rolled out by 2015 by major auto makers

Many see fuel-cell cars as being much better performing than today's electric vehicles

High cost of manufacture and creation of hydrogen fueling stations could be prohibitive

As electric cars try to forge more than just a niche in the market, the auto industry is already looking to another form of clean technology that could overtake today's battery-powered vehicles.

Commitments by automobile manufactures to develop hydrogen fuel-cell cars have surged in recent months. Toyota, Hyundai, Daimler and Honda announced plans to build vehicles that run on the most abundant element in the universe and emit only water vapor as a byproduct.

"A lot of auto makers believe the fuel-cell vehicle is just a better performing vehicle and just makes more sense," said Kevin See, a senior analyst of electric vehicles at Lux Research in Boston.

A fuel-cell-powered car can travel much longer distances than battery-powered ones before needing to be refueled, and fuel cells can be more readily used in large vehicles like trucks and SUVs.

Hyundai has announced that it will offer a fuel-cell version of its ix35 sport utility vehicle (known as the Tucson in the U.S.) on lease by the end of this year. It plans to make up to 1,000 fuel-cell cars by 2015 and thereafter 10,000 fuel-cell cars per year.

Byung Ki Ahn, the general manager of fuel-cell research at Hyundai, said the company's fuel-cell vehicles are not directly competing with its battery-powered ones.

"There might be some overlapping in-between, but basically, our strategy is that we are developing fuel cells for heavier and mid-size cars and (battery-powered) electric vehicles for smaller ones," he said.

Although Hyundai claims that it will be the first to offer fuel-cell vehicles commercially, other carmakers will be right behind it. Toyota and Honda have said they will release a fuel-cell car in 2015.

The move within the auto industry to establish plans to mass produce fuel-cell cars comes as the battery-powered electric car industry appears to be gaining traction.

Electric cars won coveted recognition earlier this month, when the Tesla Model S was named car of the year by Motor Trend magazine. It was the first time the award went to a car that was not powered by an internal combustion engine.

But some critics see electric car sales as lackluster since the Chevy Volt and Nissan Leaf became available two years ago. Other industry watchers contend that mass-produced electric cars are still at an early stage and will take time to be adopted on a large scale. In 2011, 17,000 of the two models were sold in the U.S., and sales have improved so far for this year.

While battery powered electric vehicles do not emit pollutants, harmful emissions are nevertheless emitted from power plants where the electricity is often generated.

Also a type of electric vehicle, a fuel-cell car takes hydrogen gas and converts it into electricity, while emitting only water vapor. But the processes used for extracting and transporting hydrogen can be energy intensive and rely on fossil fuels.

The advantages fuel-cell vehicles have over cars like the Leaf and Volt are shorter refueling times and greater range.

The Nissan Leaf, for example, runs for only 73 miles and takes seven hours to charge on a home-charging station.

In contrast fuel-cell cars can be driven for hundreds of miles before needing to be refueled, and it takes only a few minutes to fill a tank with hydrogen.

The relative high purchase price of electric cars comes from the cost of the lithium-ion batteries, which a Ford executive recently revealed can make up one-third of a car's price.

In a survey of auto industry executives conducted by KPMG, respondents expected that among electric vehicles, hybrids will have the highest customer demand by 2025, followed by fuel-cell vehicles, outdoing the demand of battery-powered cars.

One major barrier to wide-spread adoption of fuel-cell cars is the need for a network of refueling stations, which according to analysts cost upward of $1 million each to build.

"It has been a chicken-and-egg issue for at least a couple of decades: vehicle first or gas station first?" Ahn said.

According to the website of the U.S. Department of Energy, the country has nine public refueling stations, all located in California. Countries including Germany, Denmark and South Korea have plans to roll out dozens of stations in coming years.

"Fueling is particularly difficult because the amount of money that would have to be put in to get hydrogen generated at filling stations is very costly and would require cooperation from everyone from the automaker to the government to the fueling station owners," See said. "So it's a very complex system and also a high cost."

Despite the slow sales of battery-powered cars, the head-start they have over fuel-cell cars gives them a definitive advantage in terms of price. Currently analysts estimate that it costs about $100,000 to make a fuel-cell car.

While the fuel-cell ix35 production cost is confidential, Ahn says Hyundai's target sale price for the next three to five years for the vehicle is $50,000. The price of a petrol-powered ix35 starts at around $20,000.

See also notes that as regular petrol-powered vehicles get increasingly fuel efficient they present another attractive choice for consumers.

"They don't force you to change your habits in terms of fueling -- you can still fill up at a gas station -- and that's a much lower barrier for broader entry to market."